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GET SMART, USE YOUR HEART

GET SMART, USE YOUR HEART
Important message for property investors.

by Neil Jenman

For too long, too many self-anointed property experts have given too much bad advice, especially about investing.

But one commonly dispensed piece of advice is so bad it almost defies belief. It has fooled tens of thousands of investors.

The bad advice is this: "Always buy with your head not your heart."

Such advice makes it easier for salespeople to sell bad properties. From a dump in the bush to a shoebox in the city, they tell you to love the deal, not the property. What nonsense.

Now, before the nouveau experts start howling, consider the thousands of investors who are stuck with bad properties, many of whom don't realise it (yet). Oh sure, recently these properties have increased in value, but so have dog-kennels. Even the worst property seems good in a boom.

Many of those smug smarties, especially those who buy properties without inspecting them, are going to be frowning soon. They are going to discover that to buy without the heart is to make a thick-headed decision.

Here's why.

If you buy a property you don't like, it follows that lots of other people won't like it. You may wonder why this matters. Well, someone has to live in the property - either tenants while you own it or buyers when you decide to sell it.

If you've got a bad property, it's more likely to attract bad behaving tenants. The best tenants are those who like the property. They pay more money for it and they take better care of it.

The same with buyers. The highest sales prices usually come from family home-buyers, those who love the property, not investors.

Here is one of the most important rules when buying an investment property. If you don't like it, don't buy it. If you wouldn't live in it yourself, don't expect others to want to live in it.

Of all the property cons, the biggest, surely, is that so many investors have bought properties they don't like. When you think about it (when you use your head), it's astonishing. Thousands of people paying hundreds of millions of dollars to buy things they don't like, all because salesmen (masquerading as experts) give them a slick sales line.

Imagine going to a restaurant and the waiter says, "I know you don't like spinach, but that's all you're getting. Eat it and pay for it." It's unthinkable.

The best (and safest) investment properties are always the nice properties; ideally, family homes that have been lived and loved in for years. Rose patterned grey carpet, floral wallpaper and the smell of mothballs in the cupboards, you know the type. When you walk in, they grab you by the heart. That's the time to grab the calculator and do your sums.

Despite what some pundits say, property is headed for the doldrums. Soon, it may be time to start considering investing. After all, another smart investing rule is to buy in the gloom, not the boom.

So, for those thinking of investing in property in the future, you need to be smart. You need to use your heart as well as your head.


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This article is written by Neil Jenman, Author & Consumer Advocate.


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